Online Brokerages Report Stellar Growth

Online brokers turned in their strongest showing yet in the first quarter of 1999, adding 1.2 million accounts and processing 49 percent more trades, according to a new survey released Monday by U.S. Bancorp Piper Jaffray.

In addition to expanding the number of accounts by 17 percent, online brokerages grew assets by 24 percent over the previous quarter to $523 billion.

The average online broker customer increased their activity by 22 percent, trading an average of 3.76 times a quarter. The top 10 online brokers grew their account base by an average 20 percent. However, E*Trade Group Inc. and Datek each handily beat that average, growing their customer base by 35 percent. Subscriber growth at Charles Schwab and Fidelity came in lower than the average, although each still added 300,000 accounts.

The average customer acquisition cost fell from $205 at the end of 1998 to $187 in the first quarter.

“Online brokerages continue to make incredible gains and experience related growing pains, as both new and seasoned investors rush to trade online,” Stephen Franco, Piper Jaffray’s senior research analyst of electronic commerce wrote.

“With 8.5 million accounts and $523 billion in assets, online brokers have quickly evolved from market niche to an ever-growing market force that is redefining the way investors manage their finances.”

The top online brokers, the number of trades a day and market share percentage in the quarter were:

  1. Schwab, 138,250, 27.9 percent
  2. E*Trade, 65,800, 13.3 percent
  3. Waterhouse, 57,800, 11.7 percent
  4. Datek, 50,345, 10.1 percent
  5. Fidelity, 49,981, 10.1 percent
  6. Ameritrade, 41,252, 8.3 percent
  7. DLJdirect, 19,062, 3.8 percent
  8. Discover, 13,838, 2.8 percent
  9. Suretrade, 11,000, 2.2 percent
  10. National Discount Brokers, 6,580, 1.3 percent
  11. Others, 42,166, 8.5 percent

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